First Time Home Buyer Center

This was a useful site for first time home buyers. It provided a valuable information source for buying a home and the home buying process.
The content is from the site's 2004-2008 archived pages. The information is still useful so don't disregard even though it is from 2004-2008.

Are you a first time home buyer? Looking to become informed about the home buying process, mortgage loans and first time home buyer programs?

First Time Home Buyer Center provides you with a detailed first time home buying course on important aspects of buying a home such as:

Preparing to Buy Your First Home

How to Search for Real Estate

Obtaining a Mortgage Loan

Real Estate Closing

Begin the first time home buyers course.

The most important aspect of buying a home for the first time is being properly prepared and understanding what to expect during the home buying process. With that in mind, First Time Home Buyer Center.net is here to provide you with information you need as a first time home buyer.

Within this site you'll find valuable information such as:

First time home buyer programs

Mortgage loans for first time home buyers loans

First time home buyer grants

Think of the next person you know who will be buying a home and refer them to this site

Additionally, we have created First Time Home Buyer Worksheets that will help you qualify yourself for a mortgage loan as well as compare mortgage loans between mortgage lenders.

Get started on the path to for first time home buyer to home owner

Preparing for homeownership

For most people the American dream is to own their own home. You can make it happen, and becoming as knowledgeable as possible about the home buying process, and what to expect, will help you reach your goal of home ownership with the least amount of obstacles.

First we will help you determine if homeownership is right for you, and whether or not you can afford to buy a home at this time.

We will also help you determine your budget for buying a home, as well as what mortgage lenders look for in securing mortgage loans.

We will explain how first-time home buyers and low – and moderate-income households can extend their borrowing power with a number of flexible mortgage programs.

Are you ready to buy a home?

What is the reason homeownership is appealing to you? Buying a home is not something you just do, it’s something that needs to be well thought out, because homeownership necessitates an investment of time and money.

Why buy a home?

Here are some advantages to owning your own home.

Your own home

A home is a place that belongs to you. At this point in time you are probably prepared to settle down and become a permanent part of your community. Maybe you need more room in which to raise a family. Or, perhaps you want more breathing space than you get in a rental unit.

Financial benefits of buying a home

Buying a home can be an excellent investment for a number of different reasons.

Steady housing costs. Another benefit of owning a home is that while rents normally increase yearly, the principal and interest portions of “fixed-rate” mortgage payments remain unaffected throughout the entire repayment period, that is 30 years for a 30-year fixed-rate mortgage.

Increased value. Houses can increase in value, or “appreciate” over a period of time. A house sold for $75,000 ten years ago in certain parts of the country is worth much more today. This increase in value is as good as money deposited in the bank to the homeowner.

Scheduled savings. When you buy a house, your monthly mortgage payments build up what lenders call “equity”, an ownership interest in the property that you can borrow against or convert into cash by selling the house. Renters must keep on paying rent, without the chance to accumulate equity, the entire time they rent.

Tax incentives. Owning a home can enable you to take advantage of significant tax breaks, which are not offered to renters. Interest paid on a home mortgage is usually deductible. This alone may save you a considerable amount each year in federal income taxes.

Possible disadvantages of buying a home

In spite of all its appeal, homeownership is not for everybody. Buying a home involves a complicated, time-consuming, and costly procedure that sometimes carries with it unwelcome responsibility.

High cost of homeownership

Buying a home may cause a substantial strain on your finances. For the first several years, you should expect to pay more for housing as a homebuyer than as a renter. Property taxes, homeowner’s insurance, utilities, and upkeep added to your mortgage payment can be more than you would pay for rent.

Possibility of foreclosure

Foreclosure is the sale of a mortgaged property (your home) by the mortgage lender. This happens if the borrower fails to give monthly mortgage payments on a timely basis or otherwise defaults on the mortgage.

Financial institutions can and do foreclose when borrowers fail to make their payments. This can result not only in the loss of your home, but also in the loss of your investment and good credit mark.

Repairs and maintenance

People retreat from buying a home because they don’t want the responsibility of maintaining a home (mowing the lawn, repairs, etc.).

Deciding what you want

When buying a home, most first time home buyers have a general idea of the type and size of a house they want, as well as the location they will feel comfortable in.

If you don’t know what type of house is for you, knowing what types of homes are out there will help you make an smart decision as to the type of house that is for you.

Making a “wish list” will help you and the real estate agent narrow down the amount of homes to those that will suit your needs.

New vs. older home

Most first time home buyers buy an already existing home, but some people like the idea of moving into a new home.

New homes are usually clustered together with the same size and style homes, in the same price range. A new home is more likely to have an efficient heating/cooling system, better insulation, and more affordable to maintain.

Older homes come in all sizes and personalities. They are often made with better quality materials than newer homes, but their age may require more cost to keep it maintained. If you enjoy working with tools, a “fixer upper” may be for you.

Location

For many first time home buyers, the location of the home they buy is their most important consideration; for many others, location may not be a real choice. You probably know already whether you will be shopping for a home in an urban, suburban, or rural area. You may already know exactly what neighborhood you want to live in.

Choosing a neighborhood

Select a community, when buying a home, that will allow you to best live your daily life. Many people choose communities based on schools. Do you want access to shopping and public transportation? Is access to local facilities like libraries and museums important to you? Or do you prefer the peace and quiet of a rural community?

When you find places that you like, talk to people that live there. They know the most about the area and will be your future neighbors. More than anything, you want a neighborhood where you feel comfortable in after you buy your house.

Size requirements

When buying a home, there are many important considerations such as:

Is the number and size of rooms right for your needs?

Is the house large enough for your family size?

How soon will you outgrow the house?

Is the size of the lot what you want?

Is space for a yard, garden, or off-street parking is important to you?

Special features

You should also consider whether there are any particularly important special requirements such as:

Do you need space for laundry facilities?

Is a garage necessary?

A second bathroom?

A porch?

Air-conditioning?

Wheelchair accessibility?

Preparing for closing

The final days before closing can be a stressful period for both home buyer and seller. The buyer may have second thoughts at the prospect of taking on such a large debt. Or, they may worry that something will happen to prevent the sale—and indeed the house is not theirs until you close on it.

The signed sales contract and the signed loan commitment letter obligate both home buyer and seller to complete the transaction. If failed to do so, not only will the buyer forfeit their deposit, but may also find themselves embroiled in a lawsuit.

Setting the closing date

The closing date is set after your mortgage loan has been approved and you accept the commitment letter. The real estate agent will coordinate this date with you, the seller, your lender, and the closing agent. This needs to take place before the mortgage lender’s commitment and the rate lock-in, if there is one, expires.

Selecting a settlement agent

Closings are conducted by lending institutions, title insurance companies, escrow companies, real estate brokers, or attorneys for the buyer or seller. Usually the real estate agents will select the settlement agent at the time of the initial offer.

Meeting conditions of the loan offer

Be sure to understand the conditions of the loan offer that are stated in the mortgage lender’s commitment letter. If the home you are buying has been found to be in violation of a building code or zoning regulation, the commitment letter may specify that those problems must be corrected before the closing. If the seller has agreed to make repairs required by the lender, you will want to make sure the work is finished (and done properly) before closing.

Securing title services

Before the closing, a title search on the property is required.

Title search

Mortgage lenders require a title search to make sure the borrower receives a clean title. This means they want to be sure that the seller is indeed the owner of the property, and that there are no liens filed against the property.

Title insurance

As further insurance that the seller is giving the buyer a clean title, the lender will require that title insurance be bought. There are two types of policies:

a lender’s policy, and

an owner’s policy.

The lender’s policy protects the lender in the event a flaw in the title is detected after the property has been bought.

The owner’s policy protects the buyer. The buyer generally pays the cost of both, obtaining a combined lender’s/owner’s policy will save some money.

Termite certificate

When buying a home, many locations require the house be inspected for termites before they can be sold. The seller usually covers the inspection. The buyer should receive a certificate stating that the property is free of termites and termite damage.

Homeowner’s insurance

Mortgage lenders will require that you purchase homeowner’s insurance, which protects you and the mortgage lender from loss in the event the house is damaged or destroyed. Most home buyers purchase a homeowner’s package of insurance that includes

Personal liability insurance protects the buyer in the event they are sued by someone who is injured on their property.

Coverage against fire, theft and certain weather-related hazards

Get quotes from several companies as to what types of coverage your homeowner’s policy should include and how much coverage you need. For home owners insurance quotes online click on any of the links below:

The mortgage lender will generally require only minimal coverage up to the “replacement value” of the house.

Note that by requesting a higher deductible amount you can significantly reduce your insurance costs. In this way, you pay for minor damage yourself but have protection against major losses.

Many mortgage lenders will require that the first year’s premium be paid before closing. You may add the rest of the payments to your mortgage payment, the lender then holds the money in an escrow account and pay the insurance bill when it is due.

It you obtain the insurance on your own, you will need to bring the insurance policy and paid receipt with you to the closing.

Type of ownership

The chief options are these:

Sole ownership—you’re the only owner.

Tenancy by the entirety—available only to married couples, both owners have to agree before the house can be sold or even refinanced; when one spouse dies, the house automatically goes to the surviving spouse without going through “probate” (the legal process by which property is distributed after someone’s death).

Joint tenancy—during their lifetimes, any of the owners may sell their interest to whomever they choose; when one owner dies, the surviving owner automatically gets the deceased owner’s share in the property.

Tenancy in common—the property is owned jointly, but if one owner dies, the deceased owner’s share goes to his or her heirs rather than the surviving owner.

Homeowner’s warranty

When buying a new home, you should receive a homeowner’s warranty, which protects against certain defects in your home. Homeowner’s warranties have become available for older homes, covering the repair of the major systems during the first year of ownership.

Final walk-through inspection

When buying a home, a clause should be included in the contract allowing the buyer to examine the property within 24 hours prior to closing. This allows the buyer to make sure the seller has vacated the house, and left the appliances or property which was agreed upon.

If the sales contract made the seller responsible for ensuring that the plumbing, heating, mechanical, and electrical systems are in working order at the time of the settlement, this is the buyers’ last chance to make sure that everything works. During the walk-through, all remaining deficiencies should be noted.

If they cannot be corrected before settlement, funds may be withheld from the seller by the settlement attorney for payment of the agreed-upon repairs. If during the walk-through the buyer observes major problems or violations of the purchase contract, they have the right to hold up the settlement until they are corrected.

House tour with seller

It is wise to make an appointment to tour the house, room by room with the seller—you can do this either before or shortly after the closing—and come prepared with questions and a notepad. You’ll want to find out the location of the following:

main cutoff valves for water and gas

emergency switch for the furnace or burner;

hot water heater thermostat;

main electrical switch; and

fuse box or circuit breaker box

Does the seller know something of the history of the house? Are there old photographs that you might get copied? Are there wiring diagrams, or plans for renovation that were never carried out? What day is the garbage picked up?

Try to get the names and phone numbers of contractors and other professionals (electricians, plumbers, roofers, carpenters) who have worked on the house and find out what they did and when. Are there trees that require pruning or plants that require special care? Be sure to find out where the cutoff valve is for any outside faucets.

Final estimate of closing costs

The mortgage lender is required to give the buyer an estimate of closing costs soon after the loan application has been filed.

Since these estimates are subject to change, the buyer has the right to inspect the settlement form one business day before settlement.

It is useful to do so because the buyer will probably be required to pay the remainder of the down payment (minus the amount of deposit) and closing costs with a certified or cashier’s check. A personal check may not be acceptable.

When we first met the agent at the property, I thought he was a local kid. He was dressed in jeans and a Batman hero hoodie - was expecting a jacket and tie. We almost walked away because of this. But in spite of the casual attire, he was extremely knowledgeable regarding not only the property, but also many of the general details regarding mortgages and the condition of the property. I mention this because looks can be deceiving - it's more important to have someone who can actually advise you rather than someone who dresses formally. We ended up not buying this first property, but our Batman loving agent did find us the house we ended up buying. He was even there at the closing and prevented us from overlooking some very important issues regarding the inspections report and the conditions of the mortgage. When you're a newbie, find a real expert to guide you through the maze of issues that you will ultimately need to master. We lucked out!